It’s been several weeks since the Social Security Trustees released their 2016 Trustees Report. I’ve been waiting to see if either Donald Trump or Hillary Clinton or anyone in the press core would say a peep about the astounding $6 trillion deficit implied by the Report’s table VI.F1.
Not a peep.
As you may know, I’m running for President as a write-in candidate along with my VP choice, UCLA economist, Edward Leamer. We’ll be on the ballot along with the two party candidates if voters simply write Laurence Kotlikoff for President and Edward Leamer for Vice President on the ballot in the space provided. It’s that simple.
Ed and I are deeply concerned about our country’s fiscal condition, which is grave to say the least. If we don’t address it, we can kiss our children’s economic futures goodbye.
I’ll get back to the overall picture, but let me tell the press what they will find if they care to do their job and look at Table VI.F1. They will learn that Social Security, according to the system’s own actuaries, is now $32 trillion in the red! The $32 trillion is the present value difference between all the system’s projected future benefit payments less the sum of a) all its projected future taxes and b) its current almost $3 trillion trust fund.
We economists call this measure Social Security’s infinite horizon fiscal gap. Last year, the Trustees reported a fiscal gap of $26 trillion. So the system’s fiscal gap grew by $6 trillion over the past year, i.e., Social Security ran a $6 trillion deficit!
The system is now 32 percent underfunded. In other words, Social Security’s 12.4 percentage point payroll tax rate must be raised immediately and permanently by 32 percent, which is 4 cents out of every dollar we earn (up to Social Security’s covered earnings ceiling, which is now $118,500). The longer we wait, the higher the tax hike will have to be, which means the larger the fiscal damage our children will face.